Stagflation fears yet gold dumped

Gold TodayNew York closed yesterday at $1,322.60 yesterday.  London opened at $1,321.30.

    • The $: € was slightly weaker at $1.1239: €1 from $1.1232: €1 yesterday.
    • The Dollar index was weaker at 95.43 from 95.52 yesterday.
    • The Yen was stronger at 102.25: $1 up from 102.68: $1 yesterday against the dollar.
    • The Yuan was slightly weaker at 6.6790: $1 from 6.6733: $1 yesterday.

 

  • The Pound Sterling was stronger at $1.3229: £1 from yesterday’s $1.3201: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  15

     2016  09  14

SHAU

SHAU

/

283.68

/

284.41

Dollar equivalent @ $1: 6.6790

$1: 6.6733

/

$1,322.20

/

$1,325.60

With Shanghai on holiday today and another holiday coming in the next few days London and New York are making the prices of gold and silver. Gold in London is drifting alongside the Technical picture. The Technical picture is negative but with such strong support below current levels and below $1,300, we are doubtful that it will have more influence than it currently has in a market that is ‘drifting’.

The market is poised to be influenced once more by gold ETF action but with such a period of sideways movement any gold news that appears is expected to have a disproportionate impact. So once we see what iceberg is about to hit the developed world’s economies we can measure the damage that is coming.

We concur with the remarks by Paul Singer and Alan Greenspan of late. [See below]

LBMA price setting:  The LBMA gold price setting on Thursday was at $1,320.10. Yesterday it was at set at $1,323.20.

The gold price in the euro was set at €1,174.36 against yesterday’s €1,177.59.

Ahead of the opening of New York the gold price was trading at $1,321.10 and in the euro at €1,175.57.  At the same time, the silver price was trading at $19.01.  But after a big data release gold rose initially to around $1,326, but was subsequently dumped down to $1,310

Silver Today –The silver price was lifted to $18.98 at New York’s close yesterday up from $18.87, yesterday.  

Price Drivers

Both the gold and silver prices have barely moved in the last day. Exchange rate fluctuations have adjusted prices slightly, but essentially there has been no price affecting action in the New York, London or Shanghai markets. A raft of data released in the U.S. today has seen gold and silver  prices marked up initially, but then down, although the data content would not all necessarily have suggested the latter.  A volatile day looms.

Is all well then? Such quietness in this case could be the eye of the storm. Bear in mind we are talking about events that affect New York prices where prices are made [even though it is a minnow in physical terms]. We note the comment by Greenspan made recently, “On the economic front, the U.S. is headed toward stagflation[a combination of weak demand and elevated inflation]. We’re not in a stable equilibrium.”  

For years the Gold Forecaster has forecast the likelihood of stagflation but, through central bank actions, essentially fighting deflation, this has not happened, yet. But now, this huge supertanker of the developed world economies is soon to complete its full turn, started in 2008.

Central banks appear to have ‘shot their bolt’ and are proving relatively ineffective with their stimuli.

The future is uncharted territory and unpredictable. We agree, “We are not ‘in a stable equilibrium”.

What we can be certain of is that when this message is fully absorbed and the symptoms visible, gold and silver will come into their own as a counter to governmental failures.

Gold ETFs – There were no sales or purchases into or out of the SPDR or the Gold Trust yesterday, leaving their respective holdings at 935.489 tonnes and 225.84 tonnes.

Silver – With silver prices sitting on $19 and the gold price drifting slightly, we expect the silver price to move slightly into the $18 level but until gold makes a decent move the silver price will remain lackluster.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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